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VIRTUALISATION Growth slows, but telcos’ cut costs to maintain financial health
VIRTUALISATION Growth slows, but telcos’ cut costs to maintain financial health | Growth slows, but telcos’ cut costs to maintain financial health |
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| by Peter Dinham | |
| Monday, 18 May 2009 | |
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Of 130 service providers surveyed across four regions of the world, Ovum says revenues grew 1.8% year-over-year in 4Q08 to $377.6 billion, well down on the 19.0% year-on-year growth in 4Q07. “However, growth in operating expenses for the same period was just 1.4%, and capex dropped 2.3%,” says Ovum, adding that while the capex decline, which had worsened in early 2009, was “certainly unwelcome news to vendors,” the net impact of telcos’ cost reductions was to increase operating cash flow (OCF) margins (revenues less opex less capex, all divided by revenues) globally to 14.3% in 4Q08, from 13.2% in 4Q07. According to Matt Walker, an Ovum principal analyst based in Thailand, one important measure of industry sustainability – EBITDA divided by net debt – was stable year-on-year in the fourth quarter of last year, falling only in North America. “The North American region, however, handily increased its cash reserves (as a portion of monthly opex) in 4Q08, signalling its continued ability to attract capital despite a tough public market.” Walker says that, on the downside, carriers around the world, but especially tier one carriers in North America and Europe, the Middle East and Africa, have been taking some large write-offs/impairment charges related to goodwill and/or network or investment assets. CONTINUED page 2 |
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